Manufacturing in Nigeria: Opportunities for Investment Omo Oleghe, PhD Researcher Oluwaseyi Omoloso, MSc Student 7 March, 2017

Did You Know? RANK Developing Countries Global GDP Ranking GDP per Capita global Ranking 1 China 2 72 India 7 139 3 Nigeria 23 124 4 Egypt 31 114 5 Thailand 27 85 Nigeria has the highest GDP in Africa- 481 billion dollars And has the 23rd highest GDP in the world The 7th most populous country in the world has a GDP per Capita which is ranked 124th in the world. Agriculture and Manufacturing saw highest growth in banking credit in 2016 in Nigeria Sources The World Bank: 2015 GDP Ranking. http://data.worldbank.org/data-catalog/GDP- ranking-table 2. The World Bank: 2015 GDP per capita (current US$). http://data.worldbank.org/indicator/NY.GDP.PCAP.CD

GDP comparison over the years and between countries Source: worldbank.org Source: worldbank.org

Global Manufacturing Competitiveness Ranking   2020 Competitiveness Ranking  2020 RANK COUNTRY ↓ ↑ ↔ 1 China 1↑ United States 2 1↓ 3 Germany ↔ 4 Japan 5 South Korea 6↑ India 11 Singapore 12 Switzerland Vietnam 13 Sweden 4↑ Malaysia 14 Thailand 15 Poland Indonesia 21 Australia Netherlands 22 France 23 Czech Republic Brazil 24 Finland 25 Spain 2↑ South Africa 36 Colombia Saudi Arabia 37 Egypt 38 Nigeria 39 Argentina 40 Greece Nigeria ranks the 38th country on the table 3rd in Africa, behind South Africa and Egypt Position forecasted to remain unchanged till 2020? – We disagree. Why? Sources. 1. Deloitte and US Council on Competitiveness: 2016 Global Manufacturing Competitiveness Index.

Assessment of Manufacturing in Nigeria Strengths Abundant raw materials Large market and labour Weaknesses Weak infrastructures Low industrial skills Unaffordable finance Opportunities Manufacturing hub for region Diversification of Nigeria’s exports Manufacturing with cheap labor Bi-lateral trade agreements Threats Increasing global competition Trade policies Source: NBS Source: Nigeria Industrial Revolution Plan

Major Raw Materials and Industries by Region Strength lies in Agriculture Largest cassava producer in the world, 3rd Largest Producer of Groundnut and 4th Largest producer of Cocoa in the world Agricultural sector growth of an average of 3.5% annually since 2015 Government driving investments in agricultural production and processing Source: www.fortuneofafrica.com

Dominant Manufacturing Sectors Indorama group has increased its investments from $2 billion to $4 Billion in petrochemicals This will improve the output in: Plastics and Rubber sub sectors Chemical and Pharmaceutical Products The Nigerian government is targeting $5bn in mining investments over the next 10 years the core investor in Petrochemicals in Nigeria , The Indorama group aims to build Africa’s largest petrochemical hub in Nigeria.

Consumer products-related manufacturing investments Population and high consumer expenditure have led to increased manufacturing investments of consumer related products Consumer spending in nominal terms Source: World Bank

Infrastructure-related Manufacturing Investments Construction and real estate boom has led to an increase in cement and steel production, as well as building materials Source: tradingeconomics.com

Manufacturing Incentives in Nigeria Local raw materials utilization: 30% tax concession for 5 years for minimum local content Export: 10% tax concessions for 5 years for exporting at least 6% of products Import: Duty waivers and rebates on machinery, spare parts and raw materials Engineering: 10% tax concession for engineering companies Mining: Three-year tax holiday, as well as exemptions on import duties for mining equipment pic: punchng.com

Future outlook of Manufacturing in Nigeria Growth of retail trade will generate increased orders for manufactured consumer goods pic: jetlinking.blogspot.com Vision 2020: placing Nigeria among the 20 largest economies in the world by 2020. Encourage local content Incentives and opportunities for investment will encourage both local and foreign investors